The most undervalued aspect of investing is the area that remains shrouded in gray. Most believe that investing (and personal finance in general) is black and white. Either you invest in risky equities, or you invest in safe, bond-like securities. Either you spend as much as you make; or you hold on to every nickel and dime that you come in contact with. But what about the gray area? Or the area that you purposely shade in gray?
The gray area in investing would be asset allocation; for personal finance, the zeroed-out budgeting system. The so called “sweet spot” in either is usually identified by a financial planner (or someone of that kind of profession), or by an individual who is self-educated on what works best for their age and lifestyle mix.
In our opinion the most undervalued aspect of investing is due diligence. We harp on it time and time again, because with due diligence we have found Amazon, Apple, and Netflix to have unbelievable high returns over the last 2-2.5 years. Through due diligence you’ll see that HP(Hewlett Packard) is poised to set the investing world on fire with it’s future earnings. Take into account it’s 2010 acquisitions and you will see the breadth of its product line is about to get more intuitive than ever before. More on that later.
Due diligence is what makes the world go around. And lucky for investors of the technology age, it’s easier now than ever to come across proprietary information. Sure the larger institution have their super-computer algorithms. But, people tend to have a way of adapting and adjusting in a way that an algorithm may not due to it’s mechanical nature. Always remember that when considering due diligence; management shifts, acquisitions, and financial statements can exploit some gray areas that computers themselves cannot take into account.
Showing posts with label personal finance. Show all posts
Showing posts with label personal finance. Show all posts
Friday, November 5, 2010
Friday, October 15, 2010
Stock Twits Gets iPhone App
The Twitter equivalent to financial news and information, Stock Twits, has recently released an iPhone app for its website. The app has the same functionality of their flagship website, which uses Twitter’s API to relay financial decisions and analysis within 140 characters to the public. It will incorporate its Chart.ly web service that was specifically designed for StockTwits. Chart.ly will allow users to see screen-casts and charts streaming from traders and their investment strategies.
We really like StockTwits. We use it as a real-time crowd-sourced investment idea pool. If we see enough updates with the same symbol and trading transaction, we pay attention. This strategy usually leads us to discover a valuable company to put on our watch list.
Monday, September 27, 2010
Future Advisor: A new way to assess your finances
That said, here's a tool we recently found that helps assess your retirement prospects by aggregating a few characteristics and performing an analysis. The name of the tool is Future Advisor, and from what we've heard, it's very useful and practical for anyone wanting a quick and fairly thorough analysis.
Saturday, September 25, 2010
Setting goals for your financial independence
There's something we don't understand. Why people choose not set goals for themselves? Furthermore, why people don't have financial goals in place?
If it's hailed by all of the "experts", both self-proclaimed and acclaimed, that people with goals end up more successful than those without (the majority of the time)..why is it that the majority of people don't make tangible goals? To make this more personal our goal is to become profitable in three years. The goal of Cloud 9's founder is to have an annual salary of $100,000 before he turns 35. He turned 21 a few weeks ago.
Now to the meat of this post. Establishing financial goals for your future can prove extremely beneficial as well as useful. What it does for an individual is that it puts a tangible, attainable, relevant, and time sensitive "assignment" on their time horizon. It's a constant reminder to reach for the stars, a constant alert that you are slacking, it takes the place of a nagging wife (so-to-speak). And as human beings, setting up accountability parameters is always of the utmost importance when dealing with something as urgent as financial independence.
If it's hailed by all of the "experts", both self-proclaimed and acclaimed, that people with goals end up more successful than those without (the majority of the time)..why is it that the majority of people don't make tangible goals? To make this more personal our goal is to become profitable in three years. The goal of Cloud 9's founder is to have an annual salary of $100,000 before he turns 35. He turned 21 a few weeks ago.
Now to the meat of this post. Establishing financial goals for your future can prove extremely beneficial as well as useful. What it does for an individual is that it puts a tangible, attainable, relevant, and time sensitive "assignment" on their time horizon. It's a constant reminder to reach for the stars, a constant alert that you are slacking, it takes the place of a nagging wife (so-to-speak). And as human beings, setting up accountability parameters is always of the utmost importance when dealing with something as urgent as financial independence.
Saturday, September 4, 2010
A little trick with coupons
Her idea was simple, yet genius. She told me to tell clients to buy a Sunday paper on Monday...
Easy enough, right? On Monday the $1.50 newspaper (when purchasing on Sunday) is sold for $1.00. If you do the math, purchasing two Sunday's newspapers on Monday will save you $1.00 on newspapers. And those two dollars spent could save you up to $50 in food per week. Think about it :)
Friday, July 16, 2010
The next generation of financial planners
In March, the Alpha Group was invited by Texas Tech University to speak in an open forum over the course of two days. The Alpha Group, is a consortium made up of former financial professionals, the majority of which are ex-executives. The group was formed as sort of a round table of experts who look to research new investment and financial planning ideas. From the visit, we saw a Q&A that pretty much encompasses why Cloud 9 Financial Consulting opened its proverbial doors:
This is why our company was formed. We saw a large gap between how other industries leverage new innovations. and how the financial industry uses that same technology. These innovations have allowed us to provide excellent financial planning services that can reach any client, anywhere, anytime.
Question (TTU student): "As the next generation of planners, what should we be focusing on to serve our clients best?"
Answer (former T. Rowe Price executive): "Think about the technological world that we live in. None of this was available when we started out. When we communicated with clients, it was by phone or face-to-face. You have amazing technology so that you can work with your clients anywhere, anytime and anyplace. While your clients have access to anything and everything, our clients needed to work though us to get important financial information.
Through technology, you will find new and innovative ways to work with middle-market clients, people who really need your advice."
This is why our company was formed. We saw a large gap between how other industries leverage new innovations. and how the financial industry uses that same technology. These innovations have allowed us to provide excellent financial planning services that can reach any client, anywhere, anytime.
Thursday, June 3, 2010
Leveraging A Credit Card
We recently came across an article from MyBankTracker, concerning four steps to avoid credit card debt and decided to post a small "blurb" on the subject.
At many different financial consulting/counseling companies they don't approve of debt leveraging, or using debt positively due to its enticing features. The most notable enticing features are the ability to borrow more than you actually can pay back on a loan, and being able to spend up to your credit card limit when you have low funds in other accounts. This is the wrong way to go about debt leveraging.
The right way to take advantage of leveraging debt, is to consider all cons along with the pros. Yes, you have pretty much free money. And if used effectively you can make that money go to work for you. For example...say you take out a $1000 cash advance on your Bank of America credit card. Bank of America typically charges a 4% transaction fee on the principal withdrawn, and interest rates accrues daily from the time of withdrawal. If you can find investments that have a higher return than the interest rate(and the initial 4%), you will effectively be earning free money. If you pay back your advance within the allotted time period, you could possibly raise your credit score in the meantime.
In reality, investments like these don't occur very often. But when they do, we recommend sound due diligence before any investing decision is made. Above, we explained just one way to leverage the established line of credit on your cards. As long as you pay the lender back, the more creative the uses, the higher the reward. With that statement comes a caveat: the higher the reward, the higher the risk.
Cloud 9 consultants would only recommend creating unproven leveraging techniques if you are experienced in the field of financing.
At many different financial consulting/counseling companies they don't approve of debt leveraging, or using debt positively due to its enticing features. The most notable enticing features are the ability to borrow more than you actually can pay back on a loan, and being able to spend up to your credit card limit when you have low funds in other accounts. This is the wrong way to go about debt leveraging.
The right way to take advantage of leveraging debt, is to consider all cons along with the pros. Yes, you have pretty much free money. And if used effectively you can make that money go to work for you. For example...say you take out a $1000 cash advance on your Bank of America credit card. Bank of America typically charges a 4% transaction fee on the principal withdrawn, and interest rates accrues daily from the time of withdrawal. If you can find investments that have a higher return than the interest rate(and the initial 4%), you will effectively be earning free money. If you pay back your advance within the allotted time period, you could possibly raise your credit score in the meantime.
In reality, investments like these don't occur very often. But when they do, we recommend sound due diligence before any investing decision is made. Above, we explained just one way to leverage the established line of credit on your cards. As long as you pay the lender back, the more creative the uses, the higher the reward. With that statement comes a caveat: the higher the reward, the higher the risk.
Cloud 9 consultants would only recommend creating unproven leveraging techniques if you are experienced in the field of financing.
Friday, May 21, 2010
Free credit score...numbers included
For awhile now we've heard friends, family, colleagues, coworkers, mentors, authors, singers, acto....okay you get the point. Anyways, there's always a complaint that getting your credit report is not the same as getting your credit score. And when getting your actual score, companies hound you to sign up for their service to keep your credit score available. Well no more...
Earlier this week the Senate voted to pass the enormous financial reform and in it, an amendment that requires credit reports to include numerical credit scores. Now you'll be able to see exactly what number that loan officer will see when you apply for a business loan. Or the mortgage broker that chooses whether or not to refinance your house. Most importantly, you'll have an idea of how much to save before attempting to leverage equity with debt.
When applying for a loan you never really know what your actual credit score is, although you can usually "guesstimate" and get within the ball park. Now individuals will be able to correctly assess how much cash, or liquid assets, you will need in order to match the criteria for large and small loans. Even with the advent of the credit crunch and the crackdown on passing out loans and credit cards like candy; you can still get to the "sweet-spot" on a banks' "yes" list.
When, better stay politically correct...if the reform passes, the people serious about getting loans will simply have to look at their credit score, ask for a loan quote, and then focus on improving their personal financial statements. When the credit score changes after 4-8 months, ask for another quote to see if you are now a more favorable "risk" to lending institutions. We would imagine an individual could in fact shop around to other banks to see who will be the best at the age old game, "who can give me the lowest interest rate."
Earlier this week the Senate voted to pass the enormous financial reform and in it, an amendment that requires credit reports to include numerical credit scores. Now you'll be able to see exactly what number that loan officer will see when you apply for a business loan. Or the mortgage broker that chooses whether or not to refinance your house. Most importantly, you'll have an idea of how much to save before attempting to leverage equity with debt.
When applying for a loan you never really know what your actual credit score is, although you can usually "guesstimate" and get within the ball park. Now individuals will be able to correctly assess how much cash, or liquid assets, you will need in order to match the criteria for large and small loans. Even with the advent of the credit crunch and the crackdown on passing out loans and credit cards like candy; you can still get to the "sweet-spot" on a banks' "yes" list.
When, better stay politically correct...if the reform passes, the people serious about getting loans will simply have to look at their credit score, ask for a loan quote, and then focus on improving their personal financial statements. When the credit score changes after 4-8 months, ask for another quote to see if you are now a more favorable "risk" to lending institutions. We would imagine an individual could in fact shop around to other banks to see who will be the best at the age old game, "who can give me the lowest interest rate."
Friday, January 22, 2010
CFP vs. Financial Consulting
CFPs (advisors on the sell side) tend to give their clients general advice and recommendations. Even when they personalize the advice, they tend to use software that provides one-time recommendations.
As one of my colleagues says "CFP is showing the client a recipe. While what we do is give the client the recipe and show them how to cook it."
Financial consultants have the ability to pool all of their resources in order to provide the client with the best planning. That's a major distinction. Consultants also aren't promising any type of outrageous returns per year, because they focus more on the long term education. The CFPs...the short term performance. This minor difference separates one losing their clients billions and one keeping their assets safe. Where CFPs are loyal to the client, they tend to have some conflict of interest situations if they work for a discount broker. These brokers give them commission (this is where those hefty bonuses come from) for the profitable trades they make, at the time of the trade. And more times than none, commission is even higher if they use one of the broker's affiliated products. Ever wonder why right before the economic crash banks dished out the largest bonus ever? Financial planners/advisors were selling the riskiest investments in bulk and it collapsed on their heads a short time after. However, even with the hurting market they made their money.
This money that these scrupulous advisors made our now coming back around to attack them. President Obama has now endorsed a $9 billion tax bill, for banks, over the next 10 years that will severely hamper bonuses. For those of you that don't know about the bill, he wants the banks to repay the taxpayers for the TARP money that was dished out during the recession. Even banks that have paid back their part of the TARP will be on the raw end of the deal.
Moreover, the greed of some affected the outcome of all. And now all have to pay for it including the honest and responsible CFPs. Don’t get me wrong, I use CFPs and other financial advisors to refer my clients when they need more specific investment recommendations. However, that’s only because we at Cloud 9 are not authorized to give specific stocks and bonds advice to our clients. People across the world we see more financial consultants (counselors) rise up and capitalize on the public doubts of current CFPs.
As one of my colleagues says "CFP is showing the client a recipe. While what we do is give the client the recipe and show them how to cook it."
Financial consultants have the ability to pool all of their resources in order to provide the client with the best planning. That's a major distinction. Consultants also aren't promising any type of outrageous returns per year, because they focus more on the long term education. The CFPs...the short term performance. This minor difference separates one losing their clients billions and one keeping their assets safe. Where CFPs are loyal to the client, they tend to have some conflict of interest situations if they work for a discount broker. These brokers give them commission (this is where those hefty bonuses come from) for the profitable trades they make, at the time of the trade. And more times than none, commission is even higher if they use one of the broker's affiliated products. Ever wonder why right before the economic crash banks dished out the largest bonus ever? Financial planners/advisors were selling the riskiest investments in bulk and it collapsed on their heads a short time after. However, even with the hurting market they made their money.
This money that these scrupulous advisors made our now coming back around to attack them. President Obama has now endorsed a $9 billion tax bill, for banks, over the next 10 years that will severely hamper bonuses. For those of you that don't know about the bill, he wants the banks to repay the taxpayers for the TARP money that was dished out during the recession. Even banks that have paid back their part of the TARP will be on the raw end of the deal.
Moreover, the greed of some affected the outcome of all. And now all have to pay for it including the honest and responsible CFPs. Don’t get me wrong, I use CFPs and other financial advisors to refer my clients when they need more specific investment recommendations. However, that’s only because we at Cloud 9 are not authorized to give specific stocks and bonds advice to our clients. People across the world we see more financial consultants (counselors) rise up and capitalize on the public doubts of current CFPs.
Monday, January 18, 2010
What does being a Millionaire really mean?
I recently read this article,$1 Million Does It Still Mean You're Rich?, and I decided to write something on it. Enjoy.
It seems as time goes on, money becomes more and more worthless. People who were millionaires in the 19th century would be worth a billion dollars now. On the other hand, people who are worth a billion dollars will only be worth a million by the time the next century rolls around.
Inflation. This word doesn’t mean much too many of those uneducated in financial literacy. They believe that a 5% return on investments is 5% more money. Au contraire, with an inflation of 7% you’re actually losing money at a rate of 2%. If you don’t follow, keep reading…
The cost of living for residents varies in almost every state. Even in some states the cost of living can vary vastly by just going 10 miles outside of the metro city limits. This is where millionaire status may mean next to nothing depending on where you live. If you live in New York, $1 million will get you an extremely small apartment (and this is getting even worse as years go on). On the other hand, if you live in Nebraska, $138,000 may get you a 3 bedroom (and 3 bath) home. These effects on the housing market are only magnified when inflation is taken into consideration. In years to come this gap between what you can afford based on where you live will widen. Fortunately for those in New York, the pay for simple jobs is probably way higher compared to Nebraska using the federal minimum wage.
In consumerism, the race to $1 million is getting easier and easier and less and less glamorous. Since being a millionaire is no longer an elite status, people tend to buy expensive “toys” to show how liquid there millions are (most millionaires are so because of their real estate holdings, not many have access to $1 million in cash).
Millionaire land is beginning to grow in population. And with such growth, being a millionaire no longer gives you the label of being “rich” or “affluent.” Those two are only used to describe those of true wealth, not just those with money.
It seems as time goes on, money becomes more and more worthless. People who were millionaires in the 19th century would be worth a billion dollars now. On the other hand, people who are worth a billion dollars will only be worth a million by the time the next century rolls around.
Inflation. This word doesn’t mean much too many of those uneducated in financial literacy. They believe that a 5% return on investments is 5% more money. Au contraire, with an inflation of 7% you’re actually losing money at a rate of 2%. If you don’t follow, keep reading…
The cost of living for residents varies in almost every state. Even in some states the cost of living can vary vastly by just going 10 miles outside of the metro city limits. This is where millionaire status may mean next to nothing depending on where you live. If you live in New York, $1 million will get you an extremely small apartment (and this is getting even worse as years go on). On the other hand, if you live in Nebraska, $138,000 may get you a 3 bedroom (and 3 bath) home. These effects on the housing market are only magnified when inflation is taken into consideration. In years to come this gap between what you can afford based on where you live will widen. Fortunately for those in New York, the pay for simple jobs is probably way higher compared to Nebraska using the federal minimum wage.
In consumerism, the race to $1 million is getting easier and easier and less and less glamorous. Since being a millionaire is no longer an elite status, people tend to buy expensive “toys” to show how liquid there millions are (most millionaires are so because of their real estate holdings, not many have access to $1 million in cash).
Millionaire land is beginning to grow in population. And with such growth, being a millionaire no longer gives you the label of being “rich” or “affluent.” Those two are only used to describe those of true wealth, not just those with money.
Subscribe to:
Posts (Atom)